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RTGS is the electronic version of the bond note

20 Feb 2019 at 16:37hrs | Views
Firstly, is the RBZ going to print the RTGS dollars or not?  Either way the effect is the same because previously they created RTGS balances from thin air while physically printing bond notes. On along there was about 500 million worth of physical bond notes and about 9.5 billion RTGS balances. In reality,  what the RBZ had done is that it had created a total of 10 billion bond notes. Why do I say so? Simple: the RTGS were nothing other than an electronic version of the bond note.

We have long argued that the RTGS did not have legs of their own. They were merely an electronic version of the bond note. So today the RBZ has merely confirmed that by combing the bond notes and RTGS into one without considering their valuation differences simply because they have always been one and the same.  The minor valuation variation that existed between the bond and the RTGS was in line with monetary valuations that say that a dollar in your back pocket (e.g. physical bond) is worth more than the dollar deposited in a bank account (e.g. RTGS). A typical case of the proverbial bird in hand being better than a bird in the bush.

So in conclusion, nothing has really changed fundamentally except that the bond note balances have moved up from 500 million to their real level of 10 billion (9.5 billion RTGS + 500 million bonds).  One wonders where does all this leave the equally fictitious Afriximbank facility of US$200 million which has always been paraded to be backing the bond notes balances? Will the same facility be available to back up and guarantee the now new balance of 10 billion RTGS dollars?

The tragedy however is that, true to form, ordinary bread-eating Zimbabweans believe that the RBZ has created a new currency when in reality it's the same old but new bond note (merely dressed up in  glittering robes). Not all that glitters is gold!!!

Colls Ndlovu, is an award winning economist.

Source - Colls Ndlovu
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